Is the Past Really a Guide to the Future?

“Those who don’t know history are destined to repeat it.” So said Edmund Burke (and, in an adapted form, George Santayana). The idea that knowing what happened before will tell you what will happen next time is, I suppose, the basis for the belief in expertise. For example, some people apparently think that because Ben Bernanke is a student of the Great Depression of the 1930s, he knows what to do in the current economic climate (if this doesn’t strike you as an at least dubious inference, you may be reading the wrong blog. Surely these people have seen the small print about past performance of financial markets not being a guide to the future? After all, it is their get-out-of-jail card).

The problem for would-be experts in human affairs is that the Burke-Santayana quote, valuable though it is, doesn’t mean that history repeats itself exactly. In the chemistry lab, sure, things do happen pretty much the same again and again. But the way things repeat in human matters (like business) is more like the way family resemblances show up over generations –there are important similarities, but the differences are often more significant.

“So what?”, you might say, perhaps even suspecting me as another doomsayer exercising 20:20 hindsight about bankers and politicians who thought they had eliminated boom-and-bust.

Well let me attempt a reversal: surprises don’t have to be bad. Things often turn out much better than an expert’s extrapolation of past observations would predict. And just because a problem has been intractable doesn’t mean it can’t change very much for the better.

Some of the world’s leading brands were created or achieved leadership coming of the Great Depression (Kellogg’s, General Motors). In family life, it’s not so unusual for a troubled relationship that’s been stuck for years and expected to remain so indefinitely to be transformed, maybe by some totally unexpected or peripheral event. And there’s a very old show business joke to the effect that “It took him 17 years to be an overnight success” – all those years playing obscure gigs pay off and the artist breaks through as if from nowhere.

Failure may appear in a non-linear fashion, as per Taleb’s Black Swans, and it’s wise to take that into account. It’s also a good idea to be open to non-linear success.